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ACC 432 B Tax Return Problem - KJJ Corp.




Tax Return Problem 14-110;KJJ Corp. was formed on October 10, 1997 by Kimberly Jen (123-45-6789), Jennifer James (234-56-7890) and James Kim (345-067-8901). It is a hardware store and it is located at 175 Clerk Road, Newtown, OH 45105. KJJ?s employer identification number is 10-1010101 and its business code is 444130. KJJ?s telephone number is (513) 525-1234 and its email address is;KJJ Corp. uses the calendar year and the accrual basis. It uses straight-line depreciation for tax and book purposes and FIFO and lower-of-cost-or-market for inventory purposes.;Kimberly, Jennifer, and James each receive 200 shares of KJJ Corp.?s common stock on October 10, 1997. No other stock has been issued or is outstanding. Each is a fulltime employee of the firm and each is paid $200,000.;KJJ Corp. mad a $105,000 ($35,000 to each owner) cash distribution in 2011.;During 2011, KJJ Corp. made estimated federal tax payments of $55,000 each quarter.;Financial information for 2011 follows;Income Statement;Income;Sales $5,400,000;Sales returns and allowances 20,000;Net Sales $5,380,000;Cost of goods sold 3,120,000;Gross profit 2,260,000;Interest income;Corporate bonds $20,000;State bonds 60,000 80,000;Dividend income 100,000;Total income $2,440,000;Expenses;Salaries-Officers $600,000;Salaries and wages- Other 510,000;Life insurance premiums on three owners/officers KJJ Corp. is the beneficiary 20,000;Repairs and maintenance 30,000;Taxes (state, local, payroll) 249,000;Interest expense;Loans to acquire state bonds $25,000;Other 47,000 72,000;Advertising 36,000;Charitable contributions 25,000;Depreciation 120,000;Employee benefits program 63,000;Total expenses 1,725,000;Net income before taxes $715,000;Federal income taxes (214,200);Net income per books $500,800;Balance Sheet;12/31/10 12/31/11;Assets;Cash $400,000 $550,000;Trade and accounts receivables 600,000 623,000;Inventories 1,500,000 1,330,000;Corporate bonds 250,000 260,000;State bonds 800,000 851,000;Stock (<20% owned, domestic corporations) 900,000 1,000,000;Prepaid federal income taxes 0 5,800;Property, plant, and equipment 3,000,000 3,030,000;Accumulated depreciation (1,100,000) (1,220,000);Land 50,000 50,000;Other assets 6,000 3,000;Total assets $6,406,000 $6,482,800;Liabilities and Owner?s Equity;Accounts payable $301,000 $257,000;Other current liabilities 405,000 430,000;Mortgages 1,500,000 1,200,000;Capital stock 3,000,000 3,000,000;Retained earnings 1,200,000 1,595,800;Total liabilities and owner?s equity $6,406,000 $6,482,800;Prepare KJJ Corp?s Form 1120 and related schedules ? Schedules A, C, E, J, K, L, M-1, and M-2. (Do not complete Form 4562 [depreciation calculation] since you do not have all the information). Go to and download the necessary forms.


Paper#80024 | Written in 18-Jul-2015

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